Responses to mortgage arrears and personal debt
Several initiatives are under way to address the interlinked problems of mortgage arrears and other personal debt. Many are contained in the Mortgage Arrears Plan, described below.
The role of the Money Advice and Budgeting Service (MABS) has been enhanced, to include a Dedicated Mortgage Arrears service in several MABS locations and a Court Mentor service to assist debtors faced with court proceedings. These services were launched in December 2015.
MABS is also centrally involved in a new aid and advice scheme for people in serious mortgage arrears as part of Abhaile, the national Mortgage Arrears Resolution Service.
The Action Plan for Housing and Homelessness, published in July 2016, proposes:
- A national Mortgage Arrears Resolution Service (Abhaile, launched on 3 October 2016)
- A national information campaign, targeted at people in long-term mortgage arrears
- Possible new legislation, including simplifying the personal insolvency system
- Examining the mortgage-to-rent scheme to identify possible improvements
A series of reports dating back to 2010 provides the background to these and other initiatives – see 'Further information' below.
In December 2016, the Department of Finance published a detailed Report on Mortgage Arrears, prepared for it by the Central Bank of Ireland.
Mortgage Arrears Plan
The Mortgage Arrears Plan was announced in March 2013. Its main points are summarised as follows:
- Performance targets for banks: The Central Bank required the 6 main banks to propose sustainable solutions for a percentage of arrears accounts (pdf) by specified dates. It continued to set these rolling Mortgage Arrears Resolution Targets, requiring the banks to meet them on a quarterly basis. In April 2015, following an assessment of its supervisory engagement, it issued revised requirements to the banks.
- Review of Code of Conduct on Mortgage Arrears: A revised Code of Conduct on Mortgage Arrears came into effect in July 2013 - see below.
- Insolvency Service of Ireland: The Insolvency Service of Ireland (ISI) was established by the Personal Insolvency Act 2012 and plays a key role in the operation of personal insolvency solutions – see below.
- Mortgage-to-rent and mortgage-to-lease arrangements: There is a national mortgage-to-rent scheme for private mortgages and a mortgage-to-rent scheme for local authorities. The measures announced in May 2015 include an expansion of the national mortgage-to-rent scheme.
- Advice and guidance: The Mortgage Arrears Information and Advice Service is described below. In September 2015, details were announced of a greater role for MABS in offering information, advice and assistance to borrowers in arrears.
- Legislation on repossessions: The Land and Conveyancing Law Reform Act 2013, which became law in July 2013, enabled repossessions to be started again.
- Monitoring and review: The Central Bank is monitoring banks closely (pdf) to ensure that they make progress on dealing with distressed mortgages as set out in the performance targets outlined above.
Code of Conduct on Mortgage Arrears (CCMA)
The Central Bank’s statutory Code of Conduct on Mortgage Arrears (pdf) sets out the framework that lenders must use when dealing with borrowers who are in mortgage arrears or at risk of falling into arrears. The original version of the CCMA came into effect in February 2010. A substantially revised version was introduced in January 2011, following the report of the Expert Group on Mortgage Arrears and Personal Debt – see 'Further information' below. After a further review, a revised CCMA came into effect in July 2013.
In June 2015, the Central Bank reported on a themed inspection of compliance with the CCMA.
Read more in our document on Consumer protection codes and mortgages.
Personal insolvency legislation
The Personal Insolvency Act 2012 introduced the following 3 debt resolution processes, subject to conditions in each case:
- A Debt Relief Notice to allow for the write-off of qualifying debt up to €20,000 (later increased to €35,000) subject to a 3-year supervision period
- A Debt Settlement Arrangement for the agreed settlement of unsecured debt over 5 years
- A Personal Insolvency Arrangement for the agreed settlement of secured debt up to €3 million (though this cap can be increased with the consent of all secured creditors) and unsecured debt over 6 years
The Personal Insolvency (Amendment) Act 2015 provided for court review of proposed Personal Insolvency Arrangements; increased the threshold for Debt Relief Notices from €20,000 to €35,000; and strengthened the regulatory powers of the Insolvency Service of Ireland (ISI).
The Personal Insolvency Act 2012 revised the rules on bankruptcy. Several changes to the bankruptcy laws came into effect in December 2013. The Bankruptcy (Amendment) Act 2015 made further changes. Read more in our document on bankruptcy.
Mortgage Arrears Information and Advice Service
The Mortgage Arrears Information and Advice Service was launched in September 2012 to assist people with mortgage difficulties. It consists of:
- A Mortgage Arrears Information Helpline - now operated by MABS (0761 07 2000)
- Enhancements to keepingyourhome.ie
- Availability of financial advice for people being offered long-term restructuring proposals by the banks - see below
You can select an accountant from a panel drawn from members of recognised accountancy bodies, including the Institute of Chartered Accountants Ireland, the Association of Certified Chartered Accountants, the Institute of Certified Public Accountants and the Institute of Incorporated Public Accountants. You can find out more about this in the protocol document (pdf) on the keepingyourhome.ie website, where you can also find a list of participating accountants.
(A separate panel of accountants is being established under the new Mortgage Arrears Resolution Service, to provide free financial advice under the Scheme of Aid and Advice for borrowers in home mortgage arrears.)
Central Credit Register
The Credit Reporting Act 2013 provides for the establishment and operation of a statutory Central Credit Register (CCR) system. Credit providers will be required to report a comprehensive range of credit information. They will be obliged to check with the Register for all applications for credit above €2,000 in value. Consumers will be entitled to get one free copy of their record every 12 months.
The initial phase of the Central Credit Register will focus on lending to consumers. The first enquiries by lenders against the CCR data are expected to start after December 2017.
As well as the major initiatives outlined above, significant changes include:
The Social Housing (Assessment) (Amendment) (No.2) Regulations 2011 allow for a borrower whose mortgage has been deemed unsustainable under the MARP to be assessed for social housing.
In 2013 the Central Bank revised (pdf) its system for publishing mortgage arrears data to include buy-to-let arrears and aiming to enable easier tracking than before of the various alternative options on offer to borrowers.
The Department of Finance publishes monthly reports on mortgage arrears and restructures for the 6 main lenders covered by the Central Bank’s Mortgage Arrears Resolution Targets. These figures relate to mortgages on primary residences only.
The Irish Mortgage Holders Organisation (IMHO) has arrangements with 2 banking organisations – AIB Group and KBC Bank – whereby customers can contact IMHO for direct assistance (free of charge) in dealing with these banks about their mortgage arrears. These arrangements are funded by the banks but operate independently of them.
The Central Bank’s framework for restructuring of distressed consumer debt across multiple lenders was implemented during 2013 on a pilot basis and a review of its outcomes (pdf) was published in April 2014.
The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 provides that people whose mortgages have been transferred to unregulated entities will have the same protection that they had before the loan was sold. The Central Bank's Consumer Protection Code 2012 was updated in 2015 by an addendum (pdf) to make it clear that the Code now applies to credit servicing firms, which are firms that manage loans on behalf of unregulated entities.
The following reports provide more information about issues and proposals in this area.
The Law Reform Commission's report on Personal Debt Management and Debt Enforcement (pdf) was published in December 2010.
The Inter-Departmental Mortgage Arrears Working Group, chaired by Mr Declan Keane, reported (pdf) in September 2011.
The Expert Group on Repossessions published its report (pdf) in December 2013.
The Joint Oireachtas Committee on Finance, Public Expenditure and Reform held hearings in early 2014 on matters relating to mortgage arrears resolution processes and published its report (pdf) in July 2014. The Central Bank published its response (pdf) to this report in October 2014.
The Joint Oireachtas Committee on Justice, Defence and Equality published a report in July 2015, recommending that the term for bankruptcy should be reduced from 3 years to 1 year, with extension of up to 3 years in certain circumstances. This change took effect on 29 January 2016.